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Section 75 of the Consumer Credit Act 1974 – What does it mean for you?
One of the benefits of paying for something between £100 and £30,000 on a credit card is that your credit card issuer is equally liable if something goes wrong. So for instance, if the item you’ve ordered never arrives, or is faulty, you can put a claim in with the card issuer and the company you bought the item from.
You are able to do this because of the legal protection offered by section 75 of the Consumer Credit Act 1974. You are also covered if you pay, say, £100 on a credit card but the full purchase price is higher. And in situations like this, you are covered for the full amount (as long as it doesn’t exceed £30,000). For example, if you bought a conservatory for £10,000 and paid the deposit of £500 on your credit card, you would be covered for the full £10,000 if something went wrong.
As we mention this great benefit several times in articles and blog posts on this website, we felt it would be useful to list Section 75 in full – for your reference:
75. — (1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.
(2) Subject to any agreement between them, the creditor shall be entitled to be indemnified by the supplier for loss suffered by the creditor in satisfying his liability under sub-section (1), including costs reasonably incurred by him in defending proceedings instituted by the debtor.
(3) Sub-section (1) does not apply to a claim:
(a) under a non-commercial agreement,
(b) so far as the claim relates to a single item to which the supplier has attached a cash price not exceeding £100 or more than £30,000, or
(c) under a debtor-creditor-supplier agreement for running-account credit:
(i) which provides for the making of payments by the debtor in relation to specified periods which, in the case of an agreement which is not secured on land, do not exceed three months, and
(ii) which requires that the number of payments to be made by the debtor in repayments of the whole amount of the credit provided in each such period shall not exceed one.
(4) This section applies notwithstanding that the debtor, in entering into the transaction, exceeded the credit limit or otherwise contravened any term of the agreement.
(5) In an action brought against the creditor under sub-section (1) he shall be entitled, in accordance with rules of court, to have the supplier made a party in the proceedings.
75A - (1) If the debtor under a linked credit agreement has a claim against the supplier in respect of a breach of contract the debtor may pursue that claim against the creditor where any of the conditions in subsection (2) are met.
(2) The conditions in subsection (1) are:
(a) that the supplier cannot be traced,
(b) that the debtor has contacted the supplier but the supplier has not responded,
(c) that the supplier is insolvent, or
(d) that the debtor has taken reasonable steps to pursue his claim against the supplier but has not obtained satisfaction for his claim.
(3) The steps referred to in subsection (2)(d) need not include litigation.
(4) For the purposes of subsection (2)(d) a debtor is to be deemed to have obtained satisfaction where he has accepted a replacement product or service or other compensation from the supplier in settlement of his claim.
(5) In this section “linked credit agreement” means a regulated consumer credit agreement which serves exclusively to finance an agreement for the supply of specific goods or the provision of a specific service and where:
(a) the creditor uses the services of the supplier in connection with the preparation or making of the credit agreement, or
(b) the specific goods or provision of a specific service are explicitly specified in the credit agreement.
(6) This section does not apply where:
(a) the cash value of the goods or service is £30, 000 or less,
(b) the linked credit agreement is for credit which exceeds £60, 260, or
(c) the linked credit agreement is entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.
(7) Subsections (2) to (5) of section 16B (declaration by the debtor as to the purposes of the agreement) apply for the purposes of subsection (6)(c).
(8) This section does not apply to an agreement secured on land.